With Newly Married Couples, Give it Time

September 21, 2018

This time we hear from Jennifer Pritchard, financial planner at FIT Advisors in Redondo Beach, Calif. She talks about learning to trust the process when it comes to arranging the finances of newly married couples.

I’ve worked with a lot of newly married couples over the years, and one of the first things we always talk about is whether they plan on sharing accounts. Sometimes the clients come to me thinking they know exactly what they want. Particularly with a lot of younger couples, they come in having already made the decision to open joint accounts, and my job is to help them facilitate that process. For many couples, though, the solution is less straightforward.

A few years ago, I started working with a couple that had gotten married within the past year. They were in their early 40s, and their financial lives were more complicated than those of many younger couples. The woman had worked for a family business for many years. She had accumulated substantial assets and, although she no longer worked for the business, still derived income from it. The man worked in sales and had become quite successful, also bringing in a steady income.

Between the two of them, this couple had about a dozen major accounts. Clearly, this wasn’t going to be a simple procedure of joining their accounts or keeping them separate. But they wanted to figure out a way to distribute them as evenly as possible.

As with most new clients, I started by looking at their cash flow. It took a while to sort through their accounts and analyze their income and expenditure history, but after several months of looking at the data I determined that they were spending about $6,000 more per month than they were taking in.

The clients were shocked. They had no idea they were running a negative cash flow.

We began a series of difficult conversations about what they really valued and wanted to spend their money on. They realized that they wanted to travel no matter what, so we set aside some of their savings in a shared account specifically for that goal. We also set up an automated cash flow system, where all of the money either of them brought in went into a single account and then was divided equally into individual accounts. The goal was to get to the point where they were spending in roughly equal amounts.

Over time, though, it became clear that the man was spending significantly more than the woman. They were both a little disturbed by this, but I tried to show them that there were good reasons for the disparity. For one thing, a lot of his purchases were being used by both of them. What’s more, a lot of his spending was work-related, and went hand-in-hand with the income he was bringing in from his job.

Still, they were resistant to having their respective cash flows be anything but equal. I proposed a trial period during which there was a slight imbalance that allowed for the husband to spend more. They agreed, and after several months they’d forgotten about their initial hesitation. Now they’re back to a positive cash flow, and are working with a system of shared and separate accounts.

Jennifer Pritchard

The entire process outlined above took almost three years. What I’ve come to learn is that that’s not an unusual timeframe for sorting out the finances of newly married couples. Even couples with a much less complicated financial picture can take months or years to arrive at the best solution.

That’s because clients can’t know whether a given solution will work until they try it out for a while. I’ve learned to resist the temptation to come up with the perfect cash flow solution for couples right off the bat. Instead, I remind both myself and my clients that arriving at the right solution is a process that typically involves some trial and error.